AFP 33: Niche Sites Are NOT A Business

Justin Cooke

November 28, 2012

The title of this podcast may sound a little…off…coming from guys that have built thousands of niche sites.  This topic is brought up pretty often from both supporters and critics and so we wanted to dig into the subject a bit and show you why we agree.  We wanted to highlight some of the qualities that represent a true online business and contrast that with someone sitting at home, furiously building out niche websites.

Why Niche Sites Are Not Real Businesses

Some have fundamental misunderstandings about where the real value in our business lies.  That’s likely because Internet Marketers and Entrepreneurs don’t necessarily go hand in hand…you can be one and not the other.  We wanted to peel back the curtain and show you what separates niche site builders from actual businesses and explain exactly how the two cross over.

Check out this week’s episode here:

Direct Download – Right Click And Save As

Topics Discussed This Week Include:

  • Comparing niche sites to investments or products
  • Businesses require customers
  • Transitioning a niche site into a full-blown business
  • Building a business AROUND niche sites
  • Niche sites as a gateway

Mentions:

  • iTunes Reviews – Another 5-star review (And some whining from Justin about not having a nickname)
  • James Schramko – This guy has some brilliant processes.  Check out Own The Racecourse for more info.
  • IntelliTheme – We’ve launched the BEST theme for niche websites around!
  • Spencer From Niche Pursuits – Building a business AROUND niche sites like a BOSS!
  • Dan Norris From Inform.ly – Excellent content creator…one to watch!
  • Thomas Smale From Flipping Enterprises – THE top broker for selling online websites and properties…has more buyers than sellers!
  • Tweaky.com – Really cool service that allows you to present your web development project and they break it down into $29 steps…great for “tweaking” your site!

What did you think about this episode?  (Sorry about the scratchy intro…ugh)  Please let us know in the comments below or feel free to say hi on Twitter!  You can also use Speakpipe to leave us a message below!  (Don’t worry…you can stop and start over if it doesn’t come out right the first time!)




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Discussion
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  1. So, how a lot potential is becoming held back?

  2. liz says:

    I don’t understand why you describe tweaky.com in the podcast as something you’ve just learned about but yet it looks like you are an invester….

    http://thenextweb.com/insider/2012/07/17/99design-founders-invest-460000-in-tweaky-a-marketplace-for-minor-website-customizations/

  3. Bryan Wassel says:

    Good Podcast guys, But I will have to disagree. I feel that having a portfolio is a form of a business, though it may not be a typical business where you sell directly to customer, you have an advertising business instead. If i own a billboard, and I have a company paying me to allow them to put up ads based on what their clients tell them, then I still have a business.

    You are looking at the business definition too strictly. or from only one point of view. Advertising is a form of business. and while I agree that Adsense sites do not allow you to negotiate rates, or pick what ads are on your site, there is nothing stopping you from finding clients to put private ads on the niche site.

    Adsense is like the staffing agency of ads. you get the ads with less work on your part. which is what helps niche sites to be passive.

    I also completely agree with some of the comments below that you should have a follow up podcast taking a look at the other sides argument. maybe even get some of the people who disagree in on the podcast and have a debate about it.

    • Thanks for your comment Bryan. Keep in mind in you first example, you are the advertising company and have customers. With simply building niche sites, Google is the advertising company and they maintain the relations with the advertisers.

      True, our definition here is very narrowly focused. We did that for effect, I hope you understand. And you’re right, we could always go after clients directly to put on our sites, though we would basically have to reinvent the entire platform Google has already created with AdSense.

      I like the follow up idea. Perhaps you can leave a comment via the SpeakPipe button above (“Record a message”) and we will put it on the show.

  4. Michael says:

    Tons of ambient noise… can you run it through a noise reduction plugin next time? It sounds booming on my headphones.

  5. Yakezie says:

    Howdy Folks,

    Any pushback so far from followers who have built niche sites as a business? Curious about the other side!

    Sam

    • Sure, just look at Bryan’s comment above and some of the other comments below. Keep in mind though, that we are narrowly focused on those who simply buy/build and hold then do nothing else when we say niche sites are not a business. Most people do a lot more with their portfolio — perhaps without even knowing it!

  6. Thanks for the mention, guys. Glad to hear you putting out more podcasts…I missed them :-)

  7. Hi guys !

    It was a thought provoking podcast.

    I think we should draw our attention on how we can make sustainable businesses with niche sites.

    And in the end all this is subjective. Let’s say I don’t like/I’m not interested/whatever in X business. Doesn’t mean that it can’t be done or it’s not legit/sustainable .

    If your practice is based on ETHOS then you’re OK in my book.

    Be healthy and smile.

  8. Zedara says:

    Good points guys, I get what you mean, I think it’s a touchy subject but you’re right. I think its not to say people cant make money out of niche sites or even live off them, but in a similar way you could live from trading stocks, right?

    • JustinWCooke says:

      Agreed, Zedara…

      Quite a bit of opinion here…good to keep in mind that Joe and I are not the arbiters of what makes a successful business. Still, I think it’s good to discuss the framework on what does and doesn’t make a business and to try to define the two positions a bit. Even if everyone doesn’t agree…at least we can get it out there, eh?

  9. Shinu says:

    Gotta disagree with you guys here… Not all businesses have to sell either products or services i.e Google. Businesses can also sell leads (as Google and most content businesses do).

    • JustinWCooke says:

      Hey Shinu!

      Did we say a biz has to sell products or services? I thought we said you have to have customers, right? Might have donked that up, hehe. I would add:

      1. Google is probably too big as an example. They have products…services…customers…free and paid. They’re absolutely massive!

      2. I’d put lead delivery under a service, right? You’re delivering a service to the company that’s then using those leads. Still…I’d say if you have an affiliate site or AdSense site delivering “leads” only…that’s not really a business.

      • Shinu says:

        So are you saying if you have a site that delivers leads directly, that’s a legitimate business but if the site is an affiliate site or Adsense site delivering leads through a middleman, that’s not a legitimate business? I don’t see how adding a middleman in the lead-selling process would disqualify a website as a legitimate business.
        What about ezinearticles.com? Would you say they are not a business either? Or any of the other sites that make money through Adsense (i.e. wisegeek.com, ehow.com, etc)?

        • JustinWCooke says:

          Hey Shinu,

          These examples are much better…I don’t really have an answer here. (Exceptions, maybe?) I would have to admit the people running ezinearticles have much more of a business than the wantrapreneur, sitting in his underwear in his Mother’s basement, knocking out a few affiliate sites. Those are two extremes…I’m not exactly sure the delineation between the two…will have to give that some thought!

        • Hi shinu, i see what your saying.

          However if yoru doing lead gen then its to a specific client (or range of clients) of yours. i.e. you have a deal to sell the lead to that company that then follow through.

          So your acting as a sales agent. you can negotiate a contract with the company and also get leads through many methods including off line.

          SO a lead gen service is a business.

          With adsense WE dont have any clients we merely act as a portal for google to display their clients ads on. we cant talk to the advertiser nor can we develop a relationship to adjust pricing etc so their is no business relationship and certainly not one with google themselves as they have proven over and over again.

          I do disagree with Justin and joe in one way.

          Building adsense sites yourself with the purpose of then taking that income to reinvest in authority sites, other projects is PART of a sound business strategy.

          However as history has proven its not a low risk strategy as many of us have found. The build sites and go site on a beach as sold by to many was never valid medium term. but it was appealing :-)

      • Shinu says:

        So are you saying that adding a middleman in the lead-selling process disqualifies a website from being a legitimate business? What about Adsense sites like ezinearticles.com, ehow.com, wisegeek.com, etc?

  10. Spencer Haws says:

    Great podcast guys! I think you make some great points: a niche site is a good passive investment, but its not a traditional business until to ACTIVELY market, build, and sell. Although, its very much like a business becomes it generates money that you can live on (depending on the size of your portfolio). The other side of the coin is to look at Warren Buffet. Does he own a real business? He simply invests in stock. But the big difference is that he owns so much stock that he controls the company and can change the way it functions. Just something to think about :)

    • Hate to discagree.. but Warren has ALWAYS invested in business where he believed in the head man or team.

      He actually doesnot invest in stock interms of the value attributed by the market but rather what he considers to be value.

      So when whether a stock falls or rises is not the paramount reason for purchase.

      You are right that on many occasions he has bought all the stock or a majority where the value was fantastic. Also insurance companies to be able to use the margin to invest in other business.

      Warren great strength has be compounding earnings over very long periods of time..

    • JustinWCooke says:

      Thanks for the comment, Spencer!

      I think we just wanted to clear up some confusion about niche sites as a business strategy and the fact that some are confused, I think, about what it is that WE’RE doing. A future podcast should probably talk about the ways we can go from niche sites to a business either around or through those niche sites…that would be a helpful follow-up, I think!

      • Guys, I think you right and wrong here. While a business needs customers in your words… it would be difficult to monetize a niche site without some form of end user customer. Adsense for instance has google as your customer, buying your visitors clicks from you for pennies. So it is in fact a business in that aspect as it has a buyer and seller. Now I think you are right in the fact that the way you are running your business seems to be different and the clarification is appreciated. And I agree with Spencer, that having a portfolio that isn’t necessarily actively traded doesn’t mean it can’t be a small side biz, it might just not be good enough to live on.

        • JustinWCooke says:

          Interesting points, Adam! You’ve laid it out with Google as a customer…you’re only customer. That was one of our issues starting out our outsourcing company…we were beholden to only one customer and it’s a dangerous position to be in. It’s a business…but one that is always on the edge of not being one as well, eh?

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